ZIMBABWE will save over US$300 million this year as a result of the government’s decision to halt maize imports in the wake of the country’s bumper harvest.
Zimbabwe has been importing an average of 100 000 tonnes of maize per month from the region and as far as South America due to successive droughts in recent years.
In October 2019, the government lifted the ban on private grain sales, allowing individuals and businesses with spare cash to do so.
Zimbabwe needs around 1,8 million tonnes of maize per year, but only produced 907 628 tonnes last year due to poor rains during the 2019 summer cropping season
According to the Second Round of Crop and Livestock Assessment Report for 2021, maize production is expected to be 2 717 171 tonnes, up 199 percent from the previous year.
Dr. John Mangudya, Governor of the Reserve Bank of Zimbabwe (RBZ), announced the suspension of grain imports from Harare, saying the bumper harvest means the country can now save foreign currency and channel it to productive sectors.
“We are now able to save US$30 million from the monthly imports of 100 000 tonnes of maize,” he said.
“As a result, we now have to generate more because our productive sectors of the economy, such as manufacturing and agriculture, would obtain more foreign currency allocation through the auction system,” says the economist.
In June of last year, the monetary authorities launched the weekly Foreign Currency Auction Trading System, which has been a huge success in terms of achieving its goals of improving forex allocation to productive sectors and stabilizing the exchange rate.
A total of US$41,6 million was allocated to the productive sectors of the economy at last week’s auction. The Treasury has already set aside $60 billion to enable the GMB to procure maize from farmers this marketing season, with the first $5 billion disbursed in the first week of the season.
In June of last year, the monetary authorities implemented the weekly Foreign Currency Auction Trading System, which was a huge success in terms of achieving its goals of improving forex allocation to productive sectors and stabilizing the exchange rate.
The productive sectors of the economy received a total of $41.6 million at last week’s auction. The Treasury has already set aside $60 billion to help the GMB buy maize from farmers this marketing season, with the first $5 billion disbursed.
“The $60 billion needed to pay the farmers will not be paid all at once, but over the course of four to five months during the selling season,” Dr. Mangudya explained.
“We sell maize to millers, who then pay the money to the government or the GMB, and money circulates.”
He said that the Apex Bank would not print more money to fund maize purchases because there would be enough money in circulation.
“What the millers have done (mobilizing $20 billion via a pre-payment agreement with the government to finance GMB’s maize procurement) is also commendable,” he said.
“They must purchase maize from GMB in order for GMB to be able to use the money to pay the farmers who sell to GMB.”
Mr Tafadzwa Musarara, chairman of the Grain Millers Association of Zimbabwe (GMAZ), said millers have mobilized funds under a pre-payment agreement with the government to finance maize procurement by the GMB from farmers this selling season during a press conference in Bulawayo last week.
The pre-payment resource from GMAZ is part of a $60 billion budget set aside by the government for grain procurement by the marketing board.
Mr Musarara stated that they have been told that maize import permits have already ceased and that all current permits will expire on May 31.
“As a result, no maize or maize meal will be imported into the country beginning June 1st. They were granted a grace period in case others paid and goods were in transit, but the government has already stopped issuing new permits,” he explained.
“We support the government on that front because all import permits released in April will automatically expire on May 31.”
Mr Musarara stated that they had been told that maize import permits had already been halted, and that all remaining permits would expire on May 31.
“As a result, no maize or maize meal imports will be allowed into the country beginning June 1st. They were granted a grace period in case others had paid and goods were on their way, but the government has already stopped issuing new permits,” he said.
“All import permits issued in April will automatically expire on May 31,” says the government.
Mr Musarara said that starting in June, the country should see more local maize inflows at GMB as moisture content drops below 13% and mobile depots are set up.
“In terms of the price of a mealie-meal, I believe the retail price of a mealie-meal will begin to fall in June or July.
“It’s just a standard economic practice that when supply is high, prices fall; some households, especially in urban areas, have maize, so demand for mealie-meal will be depressed,” he explained.
The new producer price of $32 000 per tonne, which the GMB was purchasing maize at, has also been welcomed by GMAZ.
“If you convert it to US$360 per tonne (official rate) and over US$300 per tonne (black market rate), our farmers will get the highest price ever, not only in the region or in Africa, but in the world,” Mr. Musarara said.
Since the beginning of the 2021 marketing season on April 1, over 60 000 tonnes of maize have been shipped to GMB. The selling season began with nearly 1 400 buying points set up across the country, with authorities working to add 400 more selling points as the season progresses.
All 84 GMB depots have started running on a regular basis, including weekends, to ensure continuous grain deliveries, with supplies expected to pick up next month.